Slowdown in UK inflation eases pressure on Bank of England

• British inflation fell by more than expected in January and there were signs of cooling price pressure in parts of the economy watched closely by the Bank of England, adding to signs that further hefty interest rate hikes are unlikely.
• Annual consumer price inflation (CPI) cooled to 10.1% last month, the lowest reading since September, the Office for National Statistics (ONS) said on Wednesday. Economists polled by Reuters had forecast that the annual CPI rate would drop to 10.3% in January, moving further away from October's 41-year high of 11.1% but continuing to squeeze households' living standards.
• Despite the fall, inflation remains higher than in the United States or the eurozone, and many forecasters think it will stay higher as a result of Britain's acute labour shortages and other constraints on the economy such as Brexit.
• Earlier this month, the BoE said it saw signs that the surge in consumer prices had turned a corner and it suggested it was close to ending its run of interest rate hikes.
• Prices of services, which are also in the BoE's spotlight, slowed their rise in January, increasing by an annual 6.0% compared with 6.8% in December. The ONS said transport and hospitality prices helped to drag down inflation last month. Economists said the numbers added to signs that inflation was on course to fall further from its peak last year but could also be heralding the recession expected for Britain's economy in 2023.

(Source: Reuters)